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An effective bid management and tender process provides a positive evaluation approach that leads not only to the appointment of appropriate suppliers but to ensure that the ongoing relationship is a mutually beneficial. A wholly balanced and highly efficient bid and tender management process improves the quality of the supply chain while reducing costs and managing risks.
A tender is a submission made by a prospective supplier in response to an invitation to tender. It makes an offer for the supply of goods or services. As procurement routes have become more complex, tenders may be sought for a wide range of goods and services (for example, on a construction management contract the works are constructed by a number of different trade contractors each contracted to the client) and contractors may take on additional functions such as design and management.
The 4 main types of tenders are:
- Open tender
- Selective tender
- Negotiated tender
- Single-stage and two-stage tender
Open tendering is the main tendering procedures employed by both the government and private sector. Open tendering allows anyone to submit a tender to supply the goods or services required and offers an equal opportunity to any organisation to submit a tender. This type of tender is most common for the engineering and construction industry.
Open tendering provides the greatest competition among suppliers and has the advantage of creating opportunities for new or emerging suppliers to try to secure work. However, not all those who bid may be suitable for the contract and more time is required to evaluate the tenders.
Selective tendering only allows suppliers to submit tenders by invitation. These suppliers are those who are known by their track record to be suitable for a contract of that size, nature and complexity required. Selective tendering gives clients greater confidence that their requirements will be satisfied. It may be particularly appropriate for specialist or complex contracts, or contracts where there are only a few suitable firms. However, it can exclude smaller suppliers or those trying to establish themselves in a new market.
Negotiated tenders are extensively used in the engineering and construction industry commencing from tendering till dispute resolutions. Negotiating with a single supplier may be appropriate for highly specialist contracts, or for extending the scope of an existing contract. Costs are reduced and allows early contractor involvement. Since the contractor is part of the project team at a very stage of the project, this results in better communication and information flow.
Single-stage and two-stage tender
Single-stage tendering is used when all the information necessary to calculate a realistic price is available when tendering commences. An invitation to tender is issued to prospective suppliers, tenders are prepared and returned, a preferred tenderer is selected and following negotiations they may be appointed.
Two-stage tendering is used to allow early appointment of a supplier, prior to the completion of all the information required to enable them to offer a fixed price. In the first stage, a limited appointment is agreed to allow work to begin and in the second stage a fixed price is negotiated for the contract.
Other types of tender include serial tendering, framework tendering and public procurement. Serial tendering involves the preparation of tenders based on a typical or notional bill of quantities or schedule of works. Framework tendering allow the client to invite tenders from suppliers of goods and services to be carried out over a period on a call-off basis as and when required. Lastly, public procurement is for public projects held by the government.
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